Autonomy's Lynch rejects fraud claims as US probe is launched

Firm's founder hits back at HP

THE Irish founder of software firm Autonomy has vowed to defend the financial accounts of the company he sold to Hewlett-Packard (HP) for $11bn (€8.3bn), after US and UK authorities launched investigations following accusations of accounting fraud.

Tipperary-born Mike Lynch has robustly defended his company's track record after HP confirmed that information from a whistleblower has been passed to the US Department of Justice, the Securities Exchange Commission (SEC) – responsible for policing companies listed in the US – and Britain's Serious Fraud Office.

"On November 21, 2012, representatives of the US Department of Justice advised HP that they had opened an investigation relating to Autonomy," the US company said in the filing.

"HP is co-operating with the three investigating agencies," the filing stated.

HP bought UK-based Autonomy for $11bn in 2011 but the deal has since been tainted by accusations of accounting fraud under its former executives, including Tipperary-born, UK- based Mike Lynch who founded the business.

He had initially stayed on after the takeover by HP but exited the business in May this year, initially because the tie-up failed to deliver hoped-for growth.

Relations between Mr Lynch and HP hit a new low in November when HP dramatically wrote off $5bn from the $11bn value of the company and accused Autonomy's former management of accounting improprieties.

The information that has now been handed over to investigators in the US and the UK follows on from those accusations.

Mike Lynch had previously been dubbed, "Europe's Bill Gates" because his success as a software entrepreneur echoed that of the Microsoft founder.

Yesterday, he said he rejects the accusations made against his former business.

False

"Simply put, these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them," he said.

"We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained in accordance with applicable regulations, fully audited by Deloitte and available to HP during the due-diligence process."

He would co-operate with any investigation and looked forward to the opportunity to explain his position, he said. He has not been approached by any investigators to date, he added.

He wants HP to explain the breakdown of the $5bn write- down in the value of Autonomy, including stating how much of the decline is linked to the alleged accounting issues.